Stop the Sham
What is sham contracting?
Sham contracting is an illegal but widespread practice in the Australian construction industry.
It occurs when a company signs up workers as independent contractors (also known as ABN* workers) instead of hiring them properly as employees.
Companies use sham contracting so they can avoid giving an employee their working rights and entitlements. Employees on sham contracts miss out on rights and entitlements such as:
- paid sick leave, holiday leave and long service leave
- overtime and public holiday rates
- protection against unfair dismissal
- redundancy payments
- superannuation payments from employers
- workers' compensation insurance
- fares and travel allowances
- and more.
*ABN stands for Australian Business Number
What does this mean for workers?
Think about it.
No sick leave, long service leave or paid holidays means every day you don’t work, you earn no money.
If your employer doesn’t pay Superannuation, you can end up with no pension.
If the boss doesn’t pay Workers’ Compensation, who is going to cover you if you are injured at work?
How do I know if I'm on a Sham Contract? What can I do about it? - go to Campaign Downloads (left) and read the Slam the Sham booklet in English, Arabic, Chinese, Croatian, Greek, Italian, Korean, Serbian and Vietnamese. Or download the flyer in language of your choice.
Why do we need to stamp out sham contracting?
Sham contracting erodes the wages and conditions of workers.
When workers who should be employees are put on sham contracts, they are denied many of the benefits and protections that employees are legally entitled to.
The community misses out as well.
By disguising employment relationships as independent contracts, companies avoid paying payroll tax. That means less money for our schools, roads and hospitals.
When companies don’t pay superannuation, it shifts the burden of funding workers’ retirement on to society. Workers with no super have to rely on government pensions.
Sham contracting also gives an unfair advantage to companies doing the wrong thing. By evading tax, not contributing super and not paying industry standard wages and entitlements, companies that engage sham contractors are able to undercut honest employers who are doing the right thing by their workers and the community.
CFMEU's plan to stop sham contracting includes changes to the Fair Work and Tax laws: see Race to the Bottom report March 2011 in Campaign Downloads (left).
What needs to be done NOW?
A new CFMEU investigation has brought to a halt hundreds of sham contracts at construction sites across Australia on big-name contractor projects, as well as smaller sites.
Bovis Lend Lease, Multiplex, Leighton construction jobs are among those which have come under the scrutiny of the Union since March 1. These companies are taking lucrative Government contracts with one hand, while undermining Australia’s tax base with the other. See April Hardhat Express page 3.
Nationwide audits are continuing. The CFMEU is stepping up its campaign against sham contracting because the authorities are turning a blind eye to the practice.
STOP the scam at source:
The CFMEU demands that:
- Banks and financiers prove their corporate responsibility – no money for projects with Sham Contracting
- Builders and developers must weed out Sham Contracting at the tender stage – cheap tenders lead to Sham Contracting
- Builders and developers must ban Sham Contracting on their jobs
- Government projects ban sham contracting immediately
- Principal contractors should check their subcontractors: 100% of wages, entitlements and tax should be paid to workers before subbies get their next progress payment
- Contractors who are forcing workers on to sham contracts should be banned from the industry.
Download the CFMEU Campaign flyer to Stop Sham Contracting (left) and get involved today. NOTE: there are separate flyers for each State/Territory with CFMEU Construction contact numbers for each Branch campaign.
Stop the Sham News
- New ABS data shows alarming growth in sham contracting in construction sector July 5, 2011 More.
- CFMEU Submission to the Treasury BCI Forum on Reporting of Taxable Payments for Contractors June 27, 2011 More.
- Taxpayers losing $2.45b through sham contracting - Union calls for immediate Govt action March 23, 2011 More.
- Sham Contracts damaging national interest - workers take action March 7, 2011 More.
- Peace about to break out on Canberra building sites. Canberra Times March 5, 2011.
- According to 2009 ABS figures, construction accounts for 33% of all persons working as ‘independent contractors’* in Australia, although it accounts for only 9% of total Australian employment.
- 36% of all persons working in construction in Australia (or 336,000 people) were working as ‘independent contractors’ in November 2009.
- The proportion of the construction industry working as ‘independent contractors’ was more than five times the rate in all other industries (36% vs. 7%).
- The 336,000 people working in construction as ‘contractors’ included 49,000 labourers, a category the ATO has decided is ineligible to hold an ABN and work as a contractor.
- In 12 months, 2008-2009, the number of ‘independent contractors’ in construction grew by 7.6%, even though employment in the industry declined by 4.9%.
- Based on official figures, the CFMEU estimates the number of sham contracting arrangements in the industry at November 2010 to be between 92,000 and 168,000. This represents between 26-46% of all independent contractors in the industry. Anecdotal evidence and industry experience suggests the real figure is much higher.
- The CFMEU estimates that tax revenue leakage attributable to sham contracting in construction may be $2.475 billion per year.
- There are 336,000 ‘independent contractors’ in construction and 890,000 ABNs.
- The current Fair Work Act 2009 does not make sham contracting unlawful. It only deals with what employers say about an employment relationship and whether they incorrectly describe someone who is an employee as an independent contractor. It allows employers to argue that they didn’t think about the difference between an independent contractor and an employee when they made statements about a person’s employment status.
- Current Tax laws allow the tax treatment of income derived from personal services to be distorted by the use of artificial business structures and sham contracting arrangements.
- *NOTE: Citation of these ABS figures should not be taken as acceptance by the CFMEU that all persons cited by the ABS as being within the category of ‘independent contractor’ would in fact be an independent contractor as a matter of law.
Tell a Mate
Stop the Sham Downloads
- Slam the Sham booklet
How do I know if I am on a sham contract? Download this booklet, in several languages, to find out.Type: pdf, Size: 2.08 MB
- English flyer: Slam the Sham
Work out if your employment is legitimate and what to do if it's not.Type: pdf, Size: 426.23 KB
- Arabic flyer: Slam the Sham
How do I know if I am on a sham contract? Download this flyer to find out.Type: pdf, Size: 1.2 MB
- Chinese Flyer: Slam the Sham
Work out if your employment is legitimate and what to do if it's not.Type: pdf, Size: 421.6 KB
- Croatian Flyer: Slam the Sham
Work out if your employment is legitimate and what to do if it's not.Type: pdf, Size: 550.03 KB
- Greek Flyer: Slam the Sham
Work out if your employment is legitimate and what to do if it's not.Type: pdf, Size: 550.96 KB
- Italian Flyer: Slam the Sham
Work out if your employment is legitimate and what to do if it's not.Type: pdf, Size: 550.34 KB
- Korean Flyer: Slam the Sham
Work out if your employment is legitimate and what to do if it's not.Type: pdf, Size: 421.9 KB
- Serbian Flyer: Slam the Sham
Work out if your employment is legitimate and what to do if it's not.Type: pdf, Size: 550.68 KB
- Vietnamese Flyer: Slam the Sham
Work out if your employment is legitimate and what to do if it's not.Type: pdf, Size: 550.21 KB
- Race to the Bottom: Sham Contracting,in Construction, Executive Summary
Executive Summary of the CFMEU Report on Sham Contracting in Construction March 2011Type: pdf, Size: 718.18 KB
- Stop the Sham ACT
CFMEU campaign flyer explaining how sham contracting is denying construction workers their rights and ripping off Australian taxpayers.Type: pdf, Size: 2.02 MB
- Stop the Sham NSW
CFMEU campaign flyer explaining how sham contracting is denying construction workers their rights and ripping off Australian taxpayers.Type: pdf, Size: 2.87 MB
- Stop the Sham NT
CFMEU campaign flyer explaining how sham contracting is denying construction workers their rights and ripping off Australian taxpayers.Type: pdf, Size: 1.73 MB
- Stop the Sham QLD
Type: pdf, Size: 1.31 MB
- Stop the Sham SA
Type: pdf, Size: 2.28 MB
- Stop the Sham TAS
Type: pdf, Size: 2.02 MB
- Stop the Sham VIC
Type: pdf, Size: 1.27 MB
- Stop the Sham WA
Type: pdf, Size: 1.9 MB
Get Email Updates
Shame those who Sham
Let the CFMEU know ...
If Sham Contracting affects you or someone you know, please contact your local CFMEU Office:
- ACT (02) 6267 1599
- NSW (02) 9749 0400
- NT (08) 8981 5280
- QLD C&G (07) 3231 4600 QLD BL (07) 3236 2633
- SA (08) 8231 5532
- TAS (03) 6228 9595
- VIC (03) 9341 3444
- WA (03) 9221 1055
- Your Union
- Member Services